The German telecoms giant is sending a pair of contrasting signals to the market. On the one hand, it is leaning into the discount segment with new annual prepaid packs at NORMA; on the other, it has locked in a multi-year wage deal that gives analysts something to cheer about. Yet the stock continues to slide, trading at €28.27 on Thursday, down 2.11% on the day and 4.01% over the past week.
NORMA connect: annual packages with a one-off payment
Telekom Deutschland and discount retailer NORMA unveiled the NORMA connect range on 2 June. The tariffs run on Telekom’s D-Network and are billed once a year rather than monthly. The S package offers 60 gigabytes of data plus all-net flat-rate calls and texts for €69.99. The M variant bumps the data allowance to 250 GB and costs €99.99. Both include eSIM support and can be bought in participating NORMA stores or online.
The operating model is clear: NORMA handles the brand, sales and customer contact, while Telekom provides the network infrastructure and technical platform. For Telekom, the appeal is about reach rather than margin. The annual-payment structure targets price-sensitive users who want cost predictability without a long-term contract.
Labour costs locked until 2028
End of May, Telekom reached a collective bargaining agreement with the ver.di union, still subject to approval by union bodies. The deal rules out operational redundancies until the end of 2028. Pay will increase in three steps: the additional monthly payment for full-time staff rises from €190 to €340 in August 2026, then to €480 in July 2027, with a final 2.4% lift in the base pay tables in June 2028. Apprentices and dual-study students get rises of 4.1%, 3.3% and 2.4% across the same timeline.
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UBS analyst Polo Tang views the agreement as a positive for the equity story. “Rising labour costs are now priced in,” he wrote. “Knowing the exact trajectory gives management and investors a clearer planning horizon than a cheap but unpredictable wage bill.” The Swiss bank reaffirmed its “Buy” rating and €36.60 price target, implying a 27% upside from the 2 June Xetra close of roughly €28.88.
Solid Q1 supports raised guidance
Both stories sit on a strong operational base. In the first quarter of 2026, group revenue rose 4.7% organically to €29.9 billion, while adjusted EBITDA AL climbed 7.5% to €11.5 billion. Adjusted net income gained 6.5% to €2.6 billion. Service revenues in the German mobile business, where the NORMA push sits, increased 2.1% organically, with 200,000 new contract customers added under the company’s core brands.
The solid start prompted management to nudge up full-year guidance. For 2026, the company now expects adjusted EBITDA AL of around €47.5 billion (from €47.4 billion previously) and free cash flow AL of more than €19.8 billion (unchanged from the previous €19.8 billion floor). The adjusted earnings per share target remains at roughly €2.20.
The unknown variable
What the NORMA annual packs will contribute in terms of subscriber numbers or revenue has not been disclosed. Telekom has given no quantification, meaning the initiative is more a strategic signal than a near-term earnings trigger. The labour deal, by contrast, removes a key cost uncertainty and strengthens the case for UBS’s bullish call — provided ver.di’s members give their final nod. If that fails, one of the pillars underpinning the €36.60 price target crumbles.
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